How do I go about analysing and choosing a possible location for my business?

What is a business location?

The location of a business is the place where it is situated. There are a number of factors that need to be considered in choosing a location for a business. The ideal location would be one where costs are minimised. The entrepreneur would need to look at the advantages which each area offers as well as any government help which might be available.

The Analysis

What realtors say about residential real estate also applies to many small businesses: the three most important considerations are location, location, location.

Location is especially important for businesses in the retail and hospitality trades because they rely a great deal on visibility and exposure to their target market. However, location is also important for service and manufacturing ventures, which have such costs as advertising, promotion and distribution that are a direct result of where they are located.

How important is foot traffic?

Service businesses may not have the foot traffic and high visibility requirements of retailers, but their location has to be convenient for customers and their employees need adequate parking.

Manufacturers are concerned with keeping operating cost down, and that means locating near key suppliers in areas accessible for pick-ups and deliveries. When choosing the best location for your business, your first step is to target the right community.

You can analyse the community you’re thinking about by considering the following questions:

Is the population base large enough to support your business?

Does the community have a stable economic base that will promote a healthy environment in which your business can grow?

Does the demographic profile closely match that of the market you wish to serve?

What are the community attitudes or outlook?

Deciding on a demographic profile

A community’s economic base can have a direct impact on your opportunities. People move from one community to another for better job prospects, more money, better schools and a host of other reasons.

To evaluate a community’s economic base, check census data and other business statistics for the following information:

The percentage of people employed full-time and the trend in employment;

The average family income; and

Per capita total annual sales for goods or services similar to yours.

Red Flags

You can also learn a great deal about your prospective community by looking and listening. Some red flags to pay attention to include:

The necessity for high school and college graduates to leave town to find suitable employment;

The inability of other residents to find local jobs;

Declining retail sales and industrial production; and

Apathetic local business owners, educational administrators and other residents.

Favourable signs

The opening of chain- or department-store affiliates;

Branches of large industrial firms locating in the community;

A progressive chamber of commerce and other civic organisations;

Good schools and public services;

Well-maintained business and residential premises;

Good transportation facilities with access to other parts of the country; and

Construction activity accompanied by a minimal number of vacant buildings and unoccupied houses for sale.

It’s important for you to understand the demographic profile of your potential customers in order to properly evaluate a community for location.

It’s important for you to understand the demographic profile of your potential customers in order to properly evaluate a community for location.

To see if the community you’re considering offers a population with the demographic traits necessary to support your business, look at the community’s:

Purchasing power: Find out the degree of disposable income within the community.

Residences: Are homes rented or owned?

Means of transportation: Do prospective customers in the area own vehicles, ride buses or bicycles, and so on?

Age ranges: Does the community consist primarily of young people still approaching their prime earning years, young professionals, empty nesters or retirees?

Family status: Are there lots of families in the area or mostly singles?

Leisure activities: What type of hobbies and recreational activities do people in the community participate in?

Where to find information

Detailed demographic information is available from the Census Bureau. You can also get this kind of information from established businesses within your industry or from a trade association.

Many associations also have local or regional chapters that serve members in a variety of ways, with everything from newsletters to lobbying actions.

In addition, you can find figures about consumer expenditure from trade associations and government bodies, depending on whether you’d like to establish how much people are spending on household or home appliances, or you wish to source categories of expenses – from alcoholic beverages and restaurant meals to pensions and life insurance.

Then you can group consumers by income, household size, race, gender, and other characteristics relevant to your business. When you’re satisfied that the community you plan to serve has the qualities to support your business and is convenient to your customers, start searching for a site

Lease Types

A commercial lease is a contract which stipulates the terms under which business premises are leased to tenants. Short term and long-term leases are available and prices are normally charged at a rate per square metre.

There are different types of leases:

A lease is a rental agreement for a property;

Ground or land lease is a rental agreement for the use of land;

Lease with the ‘option to purchase’ is a rental contract which allows the tenant to purchase the property during the period of the lease.

It is highly recommended that you seek advice from a qualified professional who is involved in commercial property before signing a lease. It’s a big step which must be carefully planned and executed.

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The format of a tender proposal varies widely by industry, but all have the same basic requirements. The most important part of any tender response is the deadlines.

When submitting a tender it’s important to remember that it’s a highly competitive process, so it’s imperative that you provide your best quote.

Many organisations including government agencies do not negotiate prices once the tender has closed. Firstly, the tender process is an understandably competitive one. Everyone wants the same piece of the same pie so you can be sure that your tender is up against the toughest of your eligible competitors.

And although cost is an important factor in deciding which tender is awarded the contract, it’s not always the only criterion. Obviously, it goes without saying that you have to be deemed capable of delivering the goods or services required.

Before tendering

Get hold of the bid documents and analyse them.

Make sure you can match the technical, skill and experience requirements.

How much will it cost to prepare your bid?

Would the work fit in with your strategy and positioning of your business?

Estimate the costs of fulfilling the contract and whether or not you’d make enough money to justify it.

Assess how the contract would affect your other work, staffing and ability to take on other new business.

Familiarise yourself with the ins and outs of the tender process – because it’s never as easy as it sounds.

Simply put, a tender is an offer to do a particular job or supply particular goods at a particular price. Also referred to as a bid, it is a process whereby businesses have the opportunity to put forward their goods or services at their price to the organisation that has put out the tender.

Because government is spending public money on contracts, and is committed to transparency in how this is carried out, it adopts a tender process as a way of limiting the chances that contracts are awarded on the basis of favouritism, racism, nepotism or any other unfair process.

The same applies in the private sector

A similar principle applies to companies in the private sector which need to remain transparent about their procurement process.

Once you submit a tender, it will be reviewed according to a number of criteria along with all the other tenders for the same contract, after which government or the organisation will accept the tender and award the contract to its chosen service provider.

Legally binding

This contract is legally binding – it requires the service provider to deliver the goods or services at the tendered price and within a particular time framework, and it requires the other party to pay for the goods or services at the price tendered and on time. Great – so where do the snags come in?

Tenders are awarded points

All government tenders are awarded points and the bidder that obtains the highest number is awarded the contract. But in line with its procurement policy, government gives preferential points to contactors that are owned and operated by previously disadvantaged individuals (PDIs).

For example, the Small Enterprise Development Agency (Seda) points out that government adjudicates 80% of tender on price and 20% on the PDI status or gender of the business owner, for tenders under R500 000.

Companies in the private sector often have a similar policy of favouring suppliers with PDI status.

Find the information

But first you have to find out what contracts have been put to tender. National and provincial government departments; municipalities; parastatals and big companies in the private sector all issue tenders.

Partnerships

Make sure you have all the contract documentation in place detailing how profits will be split and what each party is required to deliver.

Seda also suggests that you join with two or more other small businesses rather than one partner that’s considerably bigger than you are – it’s good advice.

Do the paperwork

Once you have identified a tender that you’d like to pitch for, you need to access and complete the tender documents. On this point, filling them out correctly plays a vital part in the potential success of your bid. How hard can that be, you might ask.

It’s not so much that it’s difficult, but more that it requires you to be highly specific and pay close attention to detail. Especially for government tenders. Forget to include your price and you’ll be disqualified. Deliver your tender one minute after the deadline and it won’t even be considered.

If your product or service does not comply with the specifications of the tender, your bid will be removed from the list and you’ll have wasted your time.

The length of the contract and whether you will be paid in instalments will also determine if you are going to need bridging finance. Take all these things into consideration when working out your price.

Don’t give up

If you don’t succeed at your first tender attempt, put the process down to experience and remain tenacious. Once you have delivered successfully on one tender, you have a foot in the door and more success will follow.

In the meantime, keep focussing on delivery and service excellence – whether you are awarded tenders or not, these attributes make for a winning business formula.

What Is A Private Company And What Are The Steps Involved In Registering A PTY Ltd?

What is a private company?

A privately held company a business owned by non-governmental organisations or by a relatively small number of shareholders which does not offer or trade its company stock (shares) to the general public on the stock market.

A private company is ideal for smaller businesses that don’t have large capital requirements and want to avoid regulations with regard to disclosure that applies to public companies. A private company may be incorporated with only one member and may not have more than fifty members.

After a number of years, if a company has grown significantly and is profitable, or has promising prospects, there is often an initial public offering.

How to register a (PTY) Ltd

All the documentation need to form a public company are available from Cipro and must be lodged them. These are the necessary documents

CM5: Application for Reservation of Name or Translated Form or Shortened Form or Defensive Name with R50 deposited into the client’s customer code

CM22: Notice of Registered Office and Postal Address of Company (in duplicate)

Power of Attorney: Notification to act on behalf of promoters

CM29: Contents of Register of Directors, Auditors and Officers

CM31: Notice of, consent to change of name, or resignation by auditor or removal of auditor

CM46: Application for certificate to commence business and R60 deposited into the client’s customer code

CM47: Statement by directors regarding adequacy or inadequacy of share capital (by each director), memorandum and articles of association

Registration of a Private Company is required by law. Because the (PTY) Ltd structure is generally more complex to maintain, the help of an attorney is strongly advised.

Turnover time

It is difficult to pinpoint the exact amount of time it will take to register a company. It helps if you make sure that when you apply, you submit all the documentation that’s required. If the name of the company has already been registered, it will make the application go faster.

There’s that L-word again:

“Location, location, location”. It’s the make or break decision. Every estate agent and business owner cannot overemphasise the importance of this Critical Business Decision Number 2 (Number 1, of course, has to do with what you’re going to sell!).

Whatever business you’re in, being close to customers and convenient to business partners and suppliers is essential. That bricks-and-mortar wisdom is equally true in the world of online commerce. Having the right domain name and the right support for your online presence has emerged as a real driver of success.

Some figures put the scale of the opportunity into perspective: US e-commerce is predicted to reach $440 billion by 2017, showing a compound annual growth of 13.8%[1]. While the Internet economy is in its infancy in South Africa and Africa, it is growing strongly: research by World Wide Worx showed that consumers, small and medium businesses and government were already purchasing products and services worth R59 billion on the web three years ago.[2]

So how to secure the best and most profitable Internet real estate to make sure your business can ride the e-commerce wave?

It’s all in the name:

The first decision is what domain to use. One of the exciting developments is the launch of new Internet domain names, so it’s definitely no longer a choice of .com or .co.za. The proposed dotAfrica (.africa) geoTLD (geographic Top Level Domain) is one option that’s set to come online around the first quarter of next year, but what about the ZAdotCities domains of .joburg, .capetown or .durban? Domain names within these additional geoTLDs will be able to be snapped up by the public around November this year.

While .com remains a good choice for truly international businesses, choosing a domain name with some local flavour is probably going to work well for many companies.

The greater range of domain names also makes it more possible that you will be able to choose the right name for your business. When it comes to the more established domains, like .com or .co.za, chances are higher that the name you want has already been taken.

When it comes to that all-important name, received wisdom used to be that short was best, but the trend nowadays seems to have reversed—even phrases are now used. The key is to choose a name that is easily recognisable, that will stick in peoples’ minds and that describes the business well.

Perhaps a good example is the domain used by the writer of this article: www.domains.co.za is both a brand name and a name that perfectly describes the nature of the business. At just seven characters in length, “domains” is also an easy to spell, easy to remember word – keeping names under ten characters is guaranteed to help audience recall.

Something people will remember easily is absolutely vital.

Some companies use specific names for individual campaigns, but always make sure the business as a whole has its own web address.

Experience has shown that it’s probably worthwhile to register similar domain names to the one you choose, just to keep competitors from taking them in an effort to sow confusion.

My final advice: it’s always a good idea to use an ISPA (Internet Service Providers’ Association of SA) member to help you register the chosen address of your start-up. That way you’ll be sure that all the formalities are correct, and that the company you’re dealing with abides by ISPA’s code of conduct.

Finally, as there are already almost 950 000 .co.za domains registered, it’s a good idea to surf to www.domains.co.za and perform searches to see if the domain you would like is indeed available.